Va. Dep't of Med. Assistance Serv. v. Patient Transp. Sys. Inc.

• Decision Date: 31 May 2011
• Docket Number: Record No. 1634–10–2.
• Citation: 709 S.E.2d 188,58 Va.App. 328
• Parties: VIRGINIA DEPARTMENT OF MEDICAL ASSISTANCE SERVICESv.PATIENT TRANSPORT SYSTEMS, INC.
• Court: Virginia Court of Appeals

58 Va.App. 328

709 S.E.2d 188

VIRGINIA DEPARTMENT OF MEDICAL ASSISTANCE SERVICES

v.PATIENT TRANSPORT SYSTEMS, INC.

Record No. 1634–10–2.

Court of Appeals of Virginia, Richmond.

May 31, 2011.

Elizabeth A. McDonald, Special Counsel (Kenneth T. Cuccinelli, II, Attorney General; David E. Johnson, Deputy Attorney General; Kim F. Piner, Senior Assistant Attorney General, on briefs), for appellant.Jonathan M. Joseph (Belinda D. Jones; Christian & Barton, L.L.P., Richmond, on briefs), for appellee.Present: FRANK, HALEY and POWELL, JJ.FRANK, Judge.

In this administrative appeal under the Virginia Administrative Appeals Act (VAPA) Code § 2.2–4027, Virginia Department of Medical Assistance Services (DMAS) appeals the decision of the circuit court which sets aside the decision of DMAS in favor of DMAS for its failure to file a proper “case summary” as required by 12 VAC 30–20–540(B). For the reasons stated, we affirm the circuit court's judgment.

BACKGROUND

DMAS determined that Patient Transport Systems (Transport) was overpaid, i.e., that medical transportation ambulance service providers had been erroneously receiving co- insurance and deductible payments from cross-over claims for dual eligibles ¹ above the authorized payment level authorized by federal law and mandated by 12 VAC 30–80–170.

By letter dated September 15, 2008, DMAS notified Transport of the overpayment, enclosing a computer disc (CD) with the letter. The CD spreadsheet listed in columns: “Reference Number,” “Recipient ID,” “Paid Date,” “Procedure,” “Units,” “Service Date,” and “Paid Amount,” with numbers or dates under each column. While the September 15, 2008 letter indicated the CD included the amount of overpayment, the exhibit listing the contents of the CD shows no such listing.

Transport appealed this overpayment determination through the two levels of agency review; the informal fact finding conference (IFFC) (Code § 2.2–4019) where DMAS prevailed and the formal agency hearing (Code § 2.2–4020). At the latter level Transport challenged the adequacy of DMAS's case summary, citing 12 VAC 30–20–540(B).

The hearing officer found in favor of DMAS but indicated he did not have the authority to rule on the adequacy of the case summary. In DMAS's final agency decision, the director remanded the matter to the hearing officer to make a recommendation concerning the adequacy of the case summary. The hearing officer issued a revised decision dated November 20, 2009, concluding the case summary failed to meet the requirements of 12 VAC 30–20–540(B), specifically, that the case summary “failed to address each individual adjustment in the recovery sought by DMAS[,]” and “[t]he computer disk accompanying the September 15, 2008 recovery letter was not a part of the DMAS informal case summary.”

The hearing officer cited the testimony of Robert Chapman, a DMAS employee who prepared the CD, who stated the CD simply showed the amounts DMAS paid for Medicare co-insurance and deductibles. Chapman testified he did not analyze the claims, nor did the CD state DMAS's position for each adjustment. The hearing officer also referred to the testimony of Tom Lawson, DMAS transportation contract manager, who testified he did not mail the case summary to Transport.

The acting director's final agency decision overruled the hearing officer's finding, and determined as a matter of law that DMAS's case summary complied with 12 VAC 30–20–540(B) and that the hearing officer's conclusion was not supported by the evidence. The director found the CD was incorporated by reference into the case summary. Further, the director concluded that the regulation does not require mailing by United States Postal Service, but can be accomplished by mailing electronically, as was done in this case.

Transport appealed the final agency decision to circuit court. The circuit court overruled that decision in favor of Transport, holding that the case summary did not incorporate the CD, and even if the summary incorporated the CD, the case summary did not comply with the requirements of 12 VAC 30–20–540(B). The circuit court opined that the CD “was neither attached as an exhibit to the case summary nor incorporated by reference within the case summary.” Further, the circuit court concluded that neither the CD nor the case summary contained a detailed factual basis for each adjustment, thus the agency “had no evidential support for its conclusions....”

This appeal follows.

ANALYSIS

The narrow issue raised in this appeal is whether the case summary submitted by DMAS comported with the requirements of regulation 12 VAC 30–20–540(B), which provides:

DMAS shall file a written case summary with the DMAS Appeals Division within 30 days of the filing of the provider's notice of informal appeal. DMAS shall mail a complete copy of the case summary to the provider on the same day that the case summary is filed with the DMAS Appeals Division. The case summary shall address each adjustment, patient, service date, or other disputed matter and shall state DMAS' position for each adjustment, patient, service date, or other disputed matter. The case summary shall contain the factual basis for each adjustment, patient, service date, or other disputed matter and any other information, authority, or documentation DMAS relied upon in taking its action or making its decision. Failure to file a written case summary with the Appeals Division in the detail specified within 30 days of the filing of the provider's notice of informal appeal shall result in dismissal in favor of the provider on those issues not addressed in the detail specified.

To summarize, the case summary shall address each adjustment, patient, service date, or other disputed matters, and shall state DMAS's position on each of the above. The case summary shall contain the factual basis for each adjustment, patient, service date or other disputed matter and any other information, authority, or documentation DMAS relied upon in taking its action or making its decision.

DMAS raises three issues on appeal, alleging error in the circuit court's finding: 1) there was no evidentiary support in the record to support the agency's finding that the case summary incorporated the CD; 2) that the case summary did not satisfy the requirements of 12 VAC 30–20–540(B); and 3) the agency rewrote the regulation and thus did not act in accordance with the law.

Standard of Review

Our analysis begins with the applicable standard of review to determine whether the case summary complies with the requirements of 12 VAC 30–20–540(B).

“The Virginia Administrative Process Act authorizes judicial review of agency decisions.” Avante at Roanoke v. Finnerty, 56 Va.App. 190, 197, 692 S.E.2d 277, 280 (2010); Code § 2.2–4027. Under well established principles governing the appeal of such decisions, “the burden is upon the appealing party to demonstrate error.” Carter v. Gordon, 28 Va.App. 133, 141, 502 S.E.2d 697, 700–01 (1998). “Our review is limited to determining (1) ‘[w]hether the agency acted in accordance with law;’ (2) ‘[w]hether the agency made a procedural error which was not harmless error;’ and (3) ‘[w]hether the agency had sufficient evidential support for its findings of fact.’ ” Finnerty, 56 Va.App. at 197, 692 S.E.2d at 280 (quoting Johnston–Willis, Ltd. v. Kenley, 6 Va.App. 231, 242, 369 S.E.2d 1, 7 (1988)).

In Board of Supervisors v. State Bldg. Code Tech. Review Bd., 52 Va.App. 460, 663 S.E.2d 571 (2008), we held:

[C]ourts give “great deference” to an agency's interpretation of its own regulations. See Holtzman Oil Corp. v. Commonwealth, 32 Va.App. 532, 539, 529 S.E.2d 333, 337 (2000). This deference stems from Code § 2.2–4027, which requires that reviewing courts “take due account” of the “experience and specialized competence of the agency” promulgating the regulation. Va. Real Estate Bd. v. Clay, 9 Va.App. 152, 160–61, 384 S.E.2d 622, 627 (1989) (interpreting former Code § 9–6.14:17). Even so, “deference is not abdication, and it requires us to accept only those agency interpretations that are reasonable in light of the principles of construction courts normally employ.” EEOC v. Arabian American Oil Co., 499 U.S. 244, 260 [111 S.Ct. 1227, 1237, 113 L.Ed.2d 274] (1991) (Scalia, J., concurring).

No matter how one calibrates judicial deference, the administrative power to interpret a regulation does not include the power to rewrite it. When a regulation is “not ambiguous,” judicial deference “to the agency's position would be to permit the agency, under the guise of interpreting a regulation, to create de facto a new regulation.” Christensen v. Harris County, 529 U.S. 576, 588 [120 S.Ct. 1655, 1663, 146 L.Ed.2d 621] (2000).

Id. at 467, 663 S.E.2d at 574.

The circuit court correctly held this regulation is unambiguous. ²] As stated above, the regulation clearly states what the case summary must contain. The case summary either complies with the regulation or it does not. No interpretation by the agency is necessary, nor does the agency's specialized competence govern our review. “However, when an issue involves a pure question of statutory interpretation, that issue does not invoke the agency's specialized competence but is a question of law to be decided by the courts.” Alliance to Save the Mattaponi v. Commonwealth Dep't of Envt'l Quality, 270 Va. 423, 442, 621 S.E.2d 78, 88 (2005) (other citations omitted); see also Avalon Assisted Living Facilities v. Zager, 39 Va.App. 484, 503, 574 S.E.2d 298, 307 (2002) (noting that principles of statutory construction apply with equal force “to the interpretation of regulations adopted by an administrative agency”).

Incorporation of the CD into the Case Summary ³

DMAS contends the case summary provided to Transport incorporated by reference the CD that was sent to Transport with the notification letter of September 15, 2008. DMAS reasons that the case summary provided to Transport on November 13, 2008 refers to the...